Current Report No.: 27/2020
Legal basis: Article 17 section 1 MAR – Inside information.
Contents of the report:
The Management Board of Boryszew S.A. (“Company”, “Issuer”) in reference to the information provided in Current Report No. 18/2020 of June 24, 2020 and in the interim report for the first quarter of 2020, made public on June 29, 2020 on the exceeding of the amount set in For loan agreements, the level of the Net Financial Debt Ratio (in one case of Gross Financial Debt) to EBITDA informs that in connection with the process of preparing individual and consolidated financial data for the purposes of the Issuer’s report for H1 2020, based on the ongoing aggregation of financial information, on September 1, 2020 identified the circumstance of a possible breach of the financial covenant:
- the financial debt service ratio (DSCR) based on consolidated operating profit (EBIT) increased by depreciation and adjusted for capital expenditure and income tax paid (adjusted EBITDA) and debt service for the last 12 months, which will be tested based on the published consolidated financial statements at the end of H1 2020, resulting from loan agreements concluded between two banks financing the Group and Boryszew S.A. respectively or a subsidiary of the Issuer, for which Boryszew S.A. has provided a repayment guarantee, and
- the interest coverage ratio based on consolidated operating profit (EBIT) and interest paid for the last 12 months, which will be tested on the basis of the published consolidated financial statements as at the end of H1 2020, resulting from the contract credit agreement concluded between the Issuer’s subsidiary and the bank financing the Group, for which Boryszew S.A. issued a repayment guarantee.
Possible new violations of the above two indicators relate to loan agreements with one of the 6 banks indicated in the report for Q1 2020, in which the gross (or net) debt to EBITDA ratio is also tested, and to agreements with one of the 2 new banks, not indicated in the report for Q1 2020, in which the gross debt to EBITDA ratio may be breached for the first time only after the publication of the consolidated financial statements for H1 2020. Bearing in mind the above, the Management Board of the Company will immediately apply for waiver of any sanctions resulting from loan agreements, related to a new violation of the above-mentioned financial covenants and the temporary change or repeal of the testing of these financial indicators.
The Issuer also explains that in response to the circumstances of breaching financial covenants indicated in the above-mentioned report for Q1 2020, lending banks (except for one bank, which, according to the explanations received, plans to make a decision on breaching this ratio and the profitability ratio) at the level of the profit from sales of the automotive segment of the Boryszew Capital Group in September this year) agreed to waive any sanctions resulting from loan agreements related to violation of the above-mentioned financial covenant for Q1 2020, and in the next step they consider the possibility of changing the value of this ratio or Temporary suspension of its testing in the following quarters of this year.
The Issuer will inform about further significant events related to the circumstances described above in the form of appropriate reports.
The results for H1 2020 will be presented in the interim condensed consolidated financial statements of the Boryszew Capital Group for H1 2020, the publication of which is scheduled for September 4, 2020.
The Company explains that:
- debt service coverage ratio (DSCR) is defined as debt service to adjusted EBITDA,
- interest coverage ratio is defined as interest paid to EBIT,
- the term EBIT is defined as the result on the operating activities of the Boryszew Capital Group for the last 12 months,
- the term EBITDA is defined as the result on operating activities (EBIT) increased by the depreciation of the Boryszew Capital Group for the last 12 months,
- the term Adjusted EBITDA is defined as EBITDA of the Boryszew Capital Group adjusted by capital expenditure and income tax paid for the last 12 months,
- the term net debt is defined as the interest liabilities of the Boryszew Capital Group less cash and cash equivalents of the Boryszew Capital Group,
- the term gross debt is defined as interest liabilities of the Boryszew Capital Group,
- the term interest and paid is defined as interest paid by the Boryszew Capital Group for the last 12 months,
- the term debt service is defined as debt service (repayment of principal instalments and interest) of the Boryszew Capital Group for the last 12 months,
- profitability at the level of the automotive segment sales profit is defined as the result on sales minus the costs of management and sales to revenues from sales in the automotive segment for the last 12 months.
The above definitions and methodologies for their calculation are the same as the definitions and methodologies for calculating these ratios in the Issuer’s previous periodic reports.
Signatures:
Piotr Lisiecki – President of the Management Board
Translation from the original Polish version.
In the event of differences resulting from the translation, reference should be made to the official Polish version.